Zacks rewards Perrigo's speedy QA turnaround

Zacks likes Perrigo, and why not? Active pharmaceutical ingredient sales are up 26 percent over a year ago, to $41 million. But even more impressive is how the recently quality-challenged generics maker so quickly put its QA house in order.

About a year ago, CEO Joseph Papa received an FDA warning letter regarding the company's Allegan, MI, plant. The warning included bureaucratese concerning SOPs not followed, failure to reject sub-par product and lack of inspection. Some ibuprofen tablets were contaminated with metal shavings, and in one case an ibuprofen tablet was eventually discovered in a lot of caplets.

But it also included the blood-pressure-raising statement, "Be advised that FDA expects that your corporate management will undertake a comprehensive evaluation of manufacturing operations to ensure compliance with CGMP." During that timeframe, of course, the FDA was actively promoting its plans to prosecute executives of companies that flouted agency rules.

About a year after the warning letter, the generics-maker passed an FDA re-inspection and regained its acceptable regulatory status. That's warp speed in terms of manufacturing comebacks.

Zacks notes in a report last Friday that revenue beat estimates and that the API and generic prescriptions business sectors led the way. Zacks ranking: Outperform.

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